The comedown for the pandemic era stars has been nothing short of brutal and Shopify (SHOP) might be the perfect example of this 180-degree swivel in market trends.
With a third of the year behind us, more than two-thirds of the stock’s valuation has disappeared into the ether as investors have turned away in droves, spooked by macro trends and disappointing 4Q21 results indicating the pandemic ecommerce party was well and truly over. What’s more, the company offered a bleak outlook, with the growth expected to slow down some more.
With this as backdrop, it will be interesting to see if Shopify can pick up momentum once again or whether more doldrums await when the company reports its Q1 earnings on May 5,
For those fearing more pain, maybe one positive indicator can offer a glimmer of hope.
Looking at website traffic trends, Unique Visitors (UVs) have increased sequentially by 32% – from 162.28 million to 213.94 million. Even better, the year-over-year growth is mightily impressive — 160% uptick.
Ahead of the print, RBC’s Paul Treiber believes Shopify’s gross merchandise volume “continued to grow faster than the industry,” and anticipated to increase by 22% y/y.
As such, Treiber is calling for Q1 revenue of $1.24 billion, amounting to a 26% uptick vs. the same period last year. The figure is also in line with the consensus estimate. However, given the current shaky macro climate, Treiber says concerns around the “resiliency of consumer spending may weigh on 2H/CY22 growth expectations.”
From an investment point of view, while Treiber warns that Shopify shares are “likely to remain volatile in the near-term,” he still fully gets behind this name. “We believe Shopify is one of the most compelling long-term growth stories in our coverage,” the 5-star analyst summed up.
Therefore, Treiber rates SHOP shares an Outperform along with a $1,000 price target. The figure implies shares will be valued 125% higher in a year’s time. (To watch Treiber’s track record, click here)
What does the rest of the Street think? Opinions are evenly split; the stock’s Moderate Buy consensus rating is based on 14 Buys and Holds, each. However, practically all consider the shares undervalued right now; the $957.63 average target makes room for 12-month upside of 116%. (See Shopify stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
